Insurers are facing growing challenges with the cost of environmental catastrophes from fire to flooding.
A new statement from the Insurance Bureau of Canada has underscored the challenges caused by natural disaster damage to insurers. The insurance companies in Canada are struggling with a rising number of environmental catastrophes. The statement pointed out that the most at-risk property owners will likely find themselves paying more for coverage.
This situation is hardly one that is exclusive to the country as insurance companies worldwide face costly challenges.
The Insurance Bureau of Canada’s vice president of federal affairs, Craig Stewart, explained that the insurance industry feels severe weather should be the highest priority across the entire country. Stewart said “There are clear trends towards a warming atmosphere that have resulted in more significant losses from flooding… and as we’ve seen recently, wildfire.”
The statement was made at a time in which insurance companies continue to calculate the total cost of the largest Canadian natural disaster damage of the year, the Fort McMurray wildfire in its province of Alberta. That fire brought $3.6 billion in damages with it, making it the most costly environmental catastrophe in the history of the country.
That said, the natural disaster damage experienced by Canada went far beyond that massive wildfire.
The industry is predicting that the general insurance sector in Canada – which does not include life insurance – will likely label 2016 as the worst it has seen in decades. By the time the first half of the year had come to a close, Canadian insurance companies had already reported underwriting losses of $1.08 billion. Last year, that figure was notably different, as it saw a gain of $1.05 billion.
A substantial portion of the losses insurance companies faced will be recouped from reinsurance companies. That said, with this trend of growing natural catastrophe damage, insurers know there are changes to be made. The entire global insurance industry is looking to better protect itself to mitigate the risks from environmental catastrophes. Allianz Global Corporate & Specialty head of Canadian operations, Ulrich Kadow, explained that the insurance industry is looking to better its modeling and catastrophe exposure management in order to cope with the heightened volatility and the risk associated with it.